GOP lawmakers seek answers from Sebelius regarding CLASS Act

Last week, a report from a Republican working group revealed that administration officials, in the rush to pass Obamacare, ignored internal warnings from government experts about the fiscal sustainability of a long-term care insurance entitlement program included in the health reform law. Throughout the health care debate, officials within the Centers for Medicare and Medicaid Services, as well as the Health and Human Services Department, repeatedly warned that the CLASS Act would be a fiscal disaster. Yet, the final version of Obamacare not only included the CLASS Act; it even counted CLASS as a cost-saving measure.

Now, the Republicans behind the report want to know how high the warnings reached: Was HHS Secretary Kathleen Sebelius, for example, aware of the concerns about CLASS even before Obamacare passed? Amid rumors the administration might reassign CLASS personnel or close the CLASS office entirely, they also want to know what the administration plans to do moving forward to ensure — if the CLASS program is, in fact, implemented — that the program is sustainable.

To that end, House Oversight Committee Chairman Darrell Issa (R-Calif.) and House Energy and Commerce Committee Chairman Fred Upton (R-Mich.), along with key drivers Sens. Jeff Sessions (R-Ala.), John Thune (R-S.D.) and others, today sent a letter to Sebelius asking her to clarify how many people have been reassigned or asked to leave the CLASS office, to put forward a plan to make CLASS sustainable if the program is going to be implemented and to divulge when concerns about CLASS were first made known to her and what steps she took to address them.

The letter states:

Despite your department’s knowledge of CLASS’ unworkable design, you sent a letter on July 6, 2009, to former Senator Kennedy “to express the Administration’s support for the inclusion of the Community Living Assistance and Supports Act in the Affordable Health Choices Act.”  You referred to the program as “innovative.”  Just three days later in an email to CMS employees Jill Gotts, Amy Hall (Director of CMS Office of Legislation), and Jonathan Blum (CMS Deputy Administrator), [CMS Chief Actuary Richard] Foster continued to stress the fundamental problems of the CLASS program.  Foster stated that “[t]hirty-six years of actuarial experience lead me to believe that this program would collapse in short order and require significant Federal subsidies to continue.

The accumulated evidence about CLASS’ deficiencies indicates that it was primarily included in the PPACA because doing so improved the legislation’s estimated impact on the deficit.  CLASS improved the PPACA’s 10-year budgetary impact inside the initial budget window, only because the government collects premiums for five years before the program pays any benefits.  Therefore, while both CBO and CMS have estimated that CLASS will exacerbate future budget deficits, in the short-term initial budget window CLASS’ revenues will exceed its liabilities.

Although HHS was not able to satisfy actuarial concerns about CLASS before it was included in the PPACA, you wrote to Congressman Boustany on January 4, 2011, “We are using state-of-the-art actuarial science and economic analysis to help us craft a benefit plan that will best serve enrollees while meeting our obligations for a program that is solvent.”  While your department works to implement this deeply flawed program, it is imperative that the actions you take are within your Congressional authority. We are encouraged by your February 15th statement before the Senate Finance Committee asserting that “the [principal] rule [is] the program will not start unless it will be solvent into the future.”

We believe that, since 17 months have passed since the PPACA became law, your department has had more than sufficient time to present the American people with the specifics of your plan to create a sustainable CLASS program.  It is vital that Congress understand the changes you are considering making to CLASS.  This is especially true since the Administration has requested $120 million for program administration for Fiscal Year 2012.

The letter then requests details of Sebelius’ plan to ensure the solvency of the CLASS program — and, crucially, requests that she demonstrate she actually has the statutory authority to make the changes necessary to ensure the program’s sustainability.

And on the questions of what she knew, when and why she continued to promote CLASS’ inclusion in PPACA, the letter pulls no punches, asking point blank:

Why did you support the inclusion of the CLASS program into the PPACA in a July 2009 letter to Senator Kennedy when your department knew at that time that it was unsound and presented a substantial risk of a future bailout?

As Sessions explained in a statement, the central question is “whether a deliberate effort was made by administration officials to conceal CLASS’s true cost in order to advance the president’s agenda. Accountability goes to the top. Lawmakers and the American people deserve to know when internal concerns over CLASS were first communicated to Secretary Sebelius and what, if any, actions she took to address them. Out of control government spending is threatening our nation’s future, making a prompt and thorough explanation all the more imperative.”

Thune said it appears the administration sought to uphold its own agenda with the inclusion of the CLASS Act in the PPACA.

“Our recent Congressional investigation revealed that the Obama Administration ignored repeated warnings about the fiscal insolvency of the CLASS Act in the effort to score a political win with the passage of the new health care law,” he said. “The time is long overdue for Secretary Sebelius to come forward with more details on what the administration knew about the insolvency of the program, when they knew about it, and how they propose to remedy this fiscal disaster for taxpayers. The American people deserve to know more about this massive new entitlement program.”

In the meantime, you can bet that, if Sebelius doesn’t provide adequate answers, the calls for a CLASS Act repeal will grow ever louder. In fact, the Senate Appropriations Committee has already decided not to fund implementation of the Act.

Update: Because of a scheduling error, this post appeared briefly on the homepage at around 11:25 a.m. ET today. At the time, the letter had not yet been sent to Secretary Sebelius. The post above is essentially unchanged, but the second and third paragraphs have been updated to include information that recently emerged that the administration might shuffle CLASS personnel.